Cloud-based software stocks have done well amid the work-from-home and study-from-home environment necessitated by the COVID-19 pandemic in 2020.
Despite the pricier valuation of the category, an analyst at Needham picked one of the stocks as a recovery play in 2021.
The Anaplan Analyst: Needham analyst Scott Berg has a Buy rating on Anaplan Inc PLAN shares and hiked the price target from $85 to $95.
The analyst also named Anaplan as Needham's 2021 best idea and added it to the firm's Conviction List.
The Anaplan Thesis: Demand for Anaplan's Planning platform is set to climb in 2021 amid efforts by companies to free up time and resources to replace legacy solutions that were ill-equipped to deliver business data during the most critical time periods in the pandemic, Berg said in a Monday note.
Due to frustrations with existing planning technologies and processing, companies are now increasingly looking up to modern planning solutions such as that of Anaplan, the analyst said.
While 2020 was more about upsell, 2021 will see the return of new logo growth, he said.
"We believe the improving demand will combine with a more profitable operating model and a compelling valuation (following a year of relative underperformance) to set up PLAN shares for outperformance versus our broader universe in 2021."
PLAN Price Action: At last check, Anaplan shares were advancing 1.24% at $73.62.
Related Link: Why This Wedbush Analyst Expects A Year-End Tech Rally
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